BlackRock Alternatives’ public-private finance vehicle, Climate Finance Partnership (CFP), has acquired a 31.25% stake in Lake Turkana Wind Power (LTWP), the largest wind farm in Africa. The stake was purchased from Vestas, Finnfund, and the Investment Fund for Developing Countries for an undisclosed sum.
Located in Kenya’s northern region, the LTWP facility is equipped with 365 wind turbines and was connected to the national grid in 2018. The wind farm generates enough electricity to meet around 14% of Kenya’s current demand and serves 1.2 million homes.
Finnfund, a Finnish development financier and impact investor, has been a shareholder in LTWP since construction began in 2014. The company has now entered an agreement to sell its shares in the wind farm to CFP, a move expected to more than double its initial investment. CFP’s first private investment in Africa, the deal is subject to regulatory approvals and expected to close in Q2 2023. The wind farm has a 20-year power purchase agreement with Kenya Power and Lighting Company.
David Giordano, Global Head of Climate Infrastructure at BlackRock Alternatives, commented that the company is excited about CFP’s first investment in Kenya, one of Africa’s fastest-growing economies. He added that the company is looking forward to working with its partners in the region to source future developments that contribute to local economies and capitalize on the historic investment opportunity presented by the energy transition.
According to Finland’s Finnfund, LTWP has exceeded expectations in many ways. Despite its size and rural location, the wind farm was built on time and on budget. During operation, it has seen an exceptional annual average capacity factor of over 60%, and some days for some hours, the wind farm has generated green power to the Kenyan grid at 100% of capacity. Finnfund has committed to investing between €200-250 million in 20-30 companies in developing countries each year, with a focus on renewable energy, sustainable forestry, sustainable agriculture, financial institutions, and digital infrastructure and solutions.
CFP was conceived as a partnership between BlackRock and the governments of France (AfD), Germany (KFW), and Japan (JBIC), as well as leading US impact organizations. The partnership secured commitments of $673 million from a global consortium of investors, including governments, philanthropies, and institutional investors, in an oversubscribed final fundraise. The fund plans to invest at least 25% of its assets under management in Africa.
Kenya’s total power demand is expected to grow at almost 5% p.a. due to increasing urbanization, rural electrification, and rapid development. The LTWP wind farm has reduced Kenya’s reliance on fuel imports, helping the country save more than €281 million between 2018 and 2021. LTWP is one of the biggest private investments in Kenya’s history and demonstrates the country’s commitment to a sustainable energy future.